Wednesday, September 02, 2009

This posting was written by William Zale, Editor of CCH Advertising Law Guide.

Whistleblower lawsuits filed under the qui tam provisions of the False Claims Act triggered the government investigation that led to Pfizer’s agreement to pay $2.3 billion for fraudulently marketing drugs for off-label uses, according to today’s Department of Justice press release announcing the settlement.

Over $51.5 million of the settlement proceeds were awarded to John Kopchinski, a former Pfizer sales representative, West Point graduate, and Gulf War veteran. Another $50.5 million was divided between five other False Claim Act “relators” or whistleblowers.

Qui Tam

“Qui tam” is short for qui tam pro domino rege quam pro se ipso in hac parte sequitur, meaning “[he] who sues in this matter for the king as [well as] for himself,” according to Wikipedia.

Under the False Claims Act, an individual with independent knowledge of false or fraudulent claims made to secure government money may bring suit in the name of the federal government even where that person does not have the traditional “injury in fact” needed to satisfy U.S. Constitution Article III standing requirements. See the August 24, 2009 Trade Regulation Talk posting, “False Claims Act Amendments Expand Liability for Private Sector.”

Pfizer has agreed to pay $1 billion to resolve allegations under the False Claims Act that the company illegally promoted four drugs—Bextra, an anti-inflammatory withdrawn from the market in 2005; Geodon, an anti-psychotic; Zyvox, an antibiotic; and Lyrica, an anti-epileptic drug.

False Claims to Government Health Care Programs

Pfizer allegedly caused false claims to be submitted to government health care programs for uses that were not medically accepted indications and therefore not covered by those programs. The civil settlement also resolves allegations that Pfizer paid kickbacks to health care providers to induce them to prescribe these, as well as other, drugs.

The federal share of the civil settlement is $668,514,830 and the state Medicaid share of the civil settlement is $331,485,170. This is the largest civil fraud settlement against a pharmaceutical company in history, according to the Department of Justice.

Criminal Liability

Pfizer subsidiary Pharmacia & Upjohn Company Inc. has agreed to plead guilty to a felony violation of the Food, Drug and Cosmetic Act for misbranding Bextra with the intent to defraud or mislead.

Under the Food, Drug and Cosmetic Act, a company must specify the intended uses of a product in its new drug application to FDA. Once approved, the drug may not be marketed or promoted for so-called “off-label” uses—i.e., any use not specified in an application and approved by FDA.

Pfizer promoted the sale of Bextra for several uses and dosages that the FDA specifically declined to approve due to safety concerns, according to the Department of Justice. The company will pay a criminal fine of $1.195 billion, the largest criminal fine ever imposed in the United States for any matter. Pharmacia & Upjohn will also forfeit $105 million, for a total criminal resolution of $1.3 billion.

State Consumer Protection Laws

In addition, Pfizer announced that it has reached agreements with attorneys general of 42 states and the District of Columbia to settle state civil consumer protection law allegations related to past promotional practices concerning Geodon. The company will pay a total of $33 million to the settling states.

The settlement documents appear here on the Department of Justice website.

A detailed fact sheet jointly posted by the U.S. Department of Health & Human Services and U.S. Department of Justice is here.